UDI says tight supply, zoning to blame for condo shortage

Condo prices in Vancouver continue their stratospheric rise, with the median sale price of a typical unit in the city now over $700,000.

According to the latest update from the Urban Development Institute (UDI), there are currently no “move-in ready” new condominiums or townhomes available in City of Vancouver.

It’s important to note that the UDI is only including completed and unsold units in its calculations – something which is extremely rare in Vancouver as most projects sell out. In fact, most developers are required to sell 80 per cent of units within 9 months of the launch of presales in order to secure bank financing.

Many units are flipped — sometimes multiple times before completion — which puts never-before-lived-in units on the market, albeit at a higher price than the original deal made with the first purchaser. Something of which was pointed out on social media today by industry watchers:

According to the UDI, only 50 “move-in ready” new units are available across Metro Vancouver, which is 59 per cent fewer than a year ago and representing a drop of 95 per cent from Q2 2015.

In their quarterly state of the market report released Tuesday, the UDI says the supply of new multi-family housing in Metro Vancouver continues to worsen, held up by restrictive zoning and permit delays, especially in Vancouver.

“Any home seeker knows we don’t have enough choices for them, in either new homes or resales. Various independent and academic studies have proven supply is being throttled by restrictive single family zoning policy and delays in permitting,” says UDI President and CEO Anne McMullin. “If municipalities need more resources to process building applications faster, let’s make that happen. I can’t find any good news in this report.”

McMullin would like to see the city speed up rezoning of single-family areas to allow for multi-family developments, as well as improving the public hearing process to make it less contentious.

The report found 87 per cent of all multi-family units under construction were presold before construction commences. The supply of unsold multi-family units in the pre-construction phase has declined by 408 per cent across Metro Vancouver from Q2 2013, from 9,858 unsold units to 1,942 units at end of Q2-2017, despite an increasing population and immigration, both interprovincial and international.

The UDI is a 700-member association of the real estate development industry. The “State of the Market” report is prepared by Urban Analytics and available here.